Real Estate Credit Fund Offers 8.1% Dividend to Everyday Investors

The Arrived Private Credit Fund is positioning itself as an alternative for savers who are dissatisfied with yields available in high-yield savings accounts or certificates of deposit. Since its launch, the fund has distributed an annualized dividend of approximately 8.1%, a figure derived almost entirely from interest on short-term real-estate loans. Unlike many private credit vehicles restricted to high-net-worth participants, this fund is available to non-accredited investors, expanding access to an asset class that historically has been difficult to reach.

High-yield savings accounts and short-term CDs have offered returns in the 4% to 5% range in recent months, a level that has become widely accepted as a reasonable benchmark for “safe” cash. The Arrived product operates in a distinct segment—private residential real-estate credit—where targeted yields run closer to 8%. While the potential income is higher, the fund does not provide the daily liquidity or government backing typical of bank deposits, and investors assume the risk associated with individual borrowers and property markets.

At the core of the strategy, Arrived lends capital to professional real-estate operators through loans that generally span six to 36 months. Individual loan sizes typically fall between $100,000 and $500,000. Borrowers use the proceeds for purposes such as property renovations, rehabilitation projects, bridge financing between purchases and sales, or ground-up residential construction.

To mitigate concentration risk, the fund holds dozens of loans concurrently across multiple U.S. markets. Each loan represents only a small share of the overall portfolio, reducing the impact if a single borrower encounters difficulty. In addition, every loan is secured by residential real estate in a first-lien position, placing the fund ahead of other creditors should a property need to be liquidated to repay debt.

Arrived states that it underwrites loans with conservative loan-to-after-repair value ratios, often below 70%. This approach is intended to create a buffer between the amount lent and the estimated value of the finished property. The lower the ratio, the greater the theoretical protection if property values decline or if a project takes longer than expected to complete.

Because returns are generated almost entirely from contractual interest payments rather than property appreciation, the fund seeks to emulate a bond-like income stream. However, it remains a private credit product rather than a government-backed security, and there is no guarantee that future distributions will match past results. Investors are also subject to limited liquidity; shares cannot be redeemed on demand as they could in a money-market account.

The fund’s focus on income over price growth differentiates it from traditional real-estate investment trusts, many of which combine rental income with potential property appreciation. In this case, shareholders primarily evaluate the vehicle on its ability to maintain or increase its regular dividend. Since inception, the 8.1% annualized payout has been sustained, reflecting the interest rates embedded in the underlying loan agreements.

The portfolio’s short duration means the manager can adjust quickly to changing rate environments. As older loans mature, proceeds can be redeployed at prevailing market rates, potentially preserving the spread over savings accounts if interest rates move. Conversely, a rapid decline in borrowing demand or an uptick in defaults could pressure future distributions.

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Market observers note that private credit has expanded in recent years as banks have tightened lending standards, creating opportunities for funds willing to underwrite smaller or more specialized loans. According to industry definitions compiled by Investopedia, private credit encompasses a broad range of non-bank lending, with residential bridge loans representing one of its more established niches.

For prospective participants, eligibility requirements are minimal compared with many private offerings. Non-accredited investors—those who do not meet specific income or net-worth thresholds—can purchase shares, subject to standard regulatory limits on the proportion of their net worth they may allocate to private placements.

Expenses associated with managing the loan portfolio are deducted before dividends are paid. Details on management and servicing fees are disclosed in the fund’s offering documents, which also outline risk factors such as borrower default, property market volatility and limited secondary-market liquidity.

While the Arrived Private Credit Fund is designed to provide higher yield, its risk profile differs from federally insured deposits. Investors willing to accept those trade-offs gain exposure to a diversified pool of short-term, first-lien residential loans, with historical distributions that have exceeded many mainstream fixed-income alternatives.

Crédito da imagem: Benzinga